Wednesday, December 18, 2013

Bright: When a right is not RIGHT

Well, I did say in one of the comments, "be careful what you wish for". I knew something like this is coming but never thought that it is done so cunningly. Since it is now early Christmas for Bright Packaging's shareholders, post change of control, it may seem worse off for the shareholders.

When you look at the latest balance sheet, do you think Bright needs to raise more money? Whereas in fact, during the fight for control, one of the reasons for taking out the shareholders then was lack of dividends. Now the company is raising more money from shareholders? The new guys are supposed to issue more dividends, not asking for more from shareholders.

The probable reason the current controlling shareholders are asking for more money is to dilute the previous controlling shareholders.

And how it is done is to issue the rights at a very low price RM0.55 whereas the parent share was trading at around RM1.20 to RM1.30. On top of that, it is at 2 for 1 right! No major shareholder who are not controlling would be in the right frame of mind to put in more money, especially into the group whom had just taken them out of their control.

Well, this is it. To the minority shareholders, it is "From a frying pan into the fire."

2 comments:

There are so many ways that the bigger shareholder could do to take controlling stakes or for whatever reasons they are aiming for.

For discussion sake, I have no idea at all on what is happening to Parkson for the past two weeks. Are the bigger shareholders playing some games there for better controlling stake by compressing the share price and buying back at a lower price?

Don't think so. They could be buying at opportunities, but not overly focus on doing this. The only thing that companies that usually faced some profitability challenges would do is to take that opportunity to refurbish or do some riskier investments - which hopefully is what Parkson is doing.

Disclaimer

The content here should serve as the opinion of the writer rather than as an advice to buy or sell. You should do your own research and/or seek expert's advice when doing your investments. Any decision that you made is your own and the author should not be held accountable.